As car insurance rates continue to rise each year, you may feel stuck in a cycle of wondering if there could ever be some relief from your premiums.
You’re not alone if you’ve adopted the “new year, new me” mantra, only to look at your budget and realize that car insurance rates continue to rise.
In this post, we’ll break down why car insurance rates are increasing in 2023 and what you can do to help minimize the impact of the increase on your wallet.
WHY IS CAR INSURANCE SO EXPENSIVE IN 2023?
There are a few factors that contribute to rising car insurance rates.
- For one, there is an increased demand for auto coverage because of more people owning and operating vehicles.
- Litigation resulting from accidents has driven up the average cost per claim
- Finally, the cost of repairing and replacing damaged vehicles has also gone up, leading to more expensive policies for consumers.
WHY ARE CAR INSURANCE RATES INCREASING?
Supply and Demand
The cost of auto insurance is on the rise, and a significant driver of this increase is supply chain disruptions because of the COVID-19 pandemic.
With more people quarantined inside, businesses around the world decreased production capabilities, leading to fewer available auto parts and supplies being brought to market. This has resulted in higher costs to repair damaged vehicles and more significant expenses for insurance companies.
Severity of Claims
Insurance companies look at both frequency as well as severity of claims to help establish rates. During the pandemic, auto insurance claims saw a significant drop in frequency, or how often claims happen, because of people working from home. Less time on the road translated to much fewer claims. Now that many people are commuting again, claim frequency is back to normal, if not higher. Unfortunately, the severity of claims is also spiking. Severity is the amount of money an insurance company pays for a claim.
In addition to the dramatic rise in car parts, labor, used car prices, rental car costs, and medical bills associated with injuries, more claims have attorney representation. All of these factors are pushing rates higher across most of the United States.
HOW CAN I MINIMIZE MY 2023 CAR INSURANCE RATE INCREASE?
With a dedication to staying informed on the latest car insurance trends and exploring potential discounts, now is the perfect time to ensure that your car insurance will be right where you want it to be in 2023. Here are some tips to see car insurance decrease this year.
Increase Your Deductible
One of the easiest ways to save money on your auto insurance is to raise your deductible. Most companies offer discounts for higher deductibles, so if you’re willing to pay more out of pocket in the event of an accident, you stand to save a substantial amount of money.
However, it’s vital that you make sure you have enough money saved up in case you need it; otherwise, raising your deductible could end up costing you more than it saves.
Improve Your Credit Score
In many states, your credit score plays a big role in determining how much you pay for auto insurance, so improving your score is one of the best ways to save. This may require taking out a loan or paying off existing debt — both methods that come with their own risks — but the potential savings could be worth it.
If nothing else, making sure all of your accounts are up-to-date and avoiding any late payments should help improve your credit score slightly.
The last way to save money is perhaps the most obvious one: shop around! Different companies offer various rates and discounts, so taking some time to compare prices can go a long way toward helping you find the best deal for your budget.
Don’t merely look at a price either; consider things like customer service and coverage options, so that you know exactly what kind of coverage you’re getting for the price.
Car insurance rate increases in 2023 may seem daunting at first, but with some research and preparation, you can minimize the impact of the rise on your wallet. Shop around for quotes from different insurers before choosing a policy, consider raising your deductible or switching coverage levels if it’s financially workable for you, and look into any applicable discounts offered by insurers.
These simple steps will all work together to help ensure that you get the best deal on auto coverage. With these tips in mind, hopefully, your car insurance rate increase won’t be as painful!
If you need help finding the best car insurance coverage for the best price, start by speaking to a SimplyIOA agent at 833.872.4467 or get an auto insurance quote online now.